Markets Weekly August 1, 2026

Summary

Joseph Wang discusses four topics: a likely dead-cat bounce in AI/semiconductors after a 40% implosion and leveraged liquidations; imminent Iran war escalation that keeps gasoline futures elevated due to refinery attacks; the failure of joint US-Japan yen intervention to halt JPY depreciation because of interest-rate differentials; and a Fed proposal to cut meetings to four per year, which would increase rate volatility and push bond yields higher.

• AI semiconductor trade is probably over; the bounce is a dead-cat bounce with trapped speculators.
• Refinery attacks from Ukraine, Houthis, and Iran constrain gasoline supply, keeping RBOB futures elevated.
• Joint US-Japan yen intervention does not fix rate differentials; USD/JPY likely to keep rising.
• Proposal for four Fed meetings a year would raise rate volatility and risk premium, lifting yields across the curve.
• Leopold's hedge fund liquidation exemplifies excessive leverage in the AI trade that is now unwinding.
• Geopolitical tension could escalate further, adding to commodity and rates volatility.